Problem
Instructions:
Complete the following activities in good form. Use excel or word only. Provide all supporting calculations to show how you arrived at your numbers.
Activity-Based Costing:
Welk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data
H16Z P25P
Direct materials per unit................ $10.20 $50.50
Direct labor per unit ...................... $8.40 $25.20
Direct labor-hours per unit ............ 0.40 1.20
Annual production......................... 30,000 10,000
The company's estimated total manufacturing overhead for the year is $1,464,480 and the company's estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures Estimated Overhead Cost
Supporting direct labor (DLHs)................. $ 552,000
Setting up machines (setups) ..................... 132,480
Parts administration (part types)................ 780,000
Total..........................................................$1,464,480
H16Z P25P Total
Supporting direct labor ...... 12,000 12,000 24,000
Setting up machines........... 864 240 1,104
Parts administration ........... 600 960 1,560
Required:
• Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
• Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.
The response must include a reference list. Using one-inch margins, double-space, Times New Roman 12 pnt font and APA style of writing and citations.